There's very little of the buffer left.
As peace talks between the United States and Iran collapse and the Strait of Hormuz remains closed to shipping, the world's energy markets are once again tightening around a chokepoint that history has always made consequential. For Australians, this distant conflict is arriving at the petrol pump within days — a reminder that the price of fuel is never merely local, but a reflection of the whole world's unresolved tensions. The government's temporary excise relief, introduced to cushion an earlier spike, now faces a reckoning: extend it and absorb the cost, or let households bear the weight of a war they did not choose.
- Tapis crude has hit $174 a barrel — nearly triple the government's own budget assumptions — as Middle East peace talks collapse and the Strait of Hormuz stays shut.
- Australian drivers who enjoyed two weeks of falling prices are now facing a 10–15% jump at the bowser within seven to ten days as the international spike filters through.
- The closure of one of the world's most critical shipping lanes has left global stockpiles critically thin, with Chevron and Exxon executives warning there is almost no buffer remaining.
- Prime Minister Albanese has refused to rule out extending the 26-cent fuel excise cut past June 30, but has offered no commitment — leaving households and the budget in a state of uncertainty.
- One fragile bright spot: panic buying has eased, fuel station shortages have halved, and demand has dropped 20% as Australians quietly adjust their driving habits to the new reality.
Australians enjoyed a brief reprieve at the pump through late April, as hopes of a US-Iran ceasefire briefly pushed fuel prices down. Those hopes have since collapsed. With peace talks failing and the Middle East conflict deepening, global oil benchmarks are climbing back toward crisis levels — and service stations are bracing for another sharp spike within days.
Australia's regional benchmark, Tapis crude, closed Friday at $174 a barrel — the highest since Russia's invasion of Ukraine in 2022, and nearly triple what the federal government assumed in its mid-year budget. The Strait of Hormuz, one of the world's most vital shipping channels, remains effectively closed, strangling Middle Eastern energy exports and draining global stockpiles. Senior executives at Chevron and Exxon have warned publicly that there is almost no buffer left in the system.
The impact will reach local forecourts within seven to ten days. Regular unleaded was averaging $1.80 a litre in Sydney and Melbourne on Friday, with diesel at $2.50 — but both are expected to jump sharply. In late March, before the brief ceasefire rumour, diesel had reached $3.10 and unleaded $2.59. The government's 26-cent fuel excise cut, introduced in April to help contain inflation, has become politically charged. Prime Minister Albanese has not ruled out extending it beyond June 30, but has stopped short of any commitment, acknowledging the deep uncertainty: "We don't know when this war will end."
There is some measured relief in the data. Panic buying has subsided since the frantic early weeks of the conflict, when fuel sales hit a six-year peak. Demand has since fallen by as much as 20 percent, service station shortages have more than halved, and government conservation messaging combined with new supply agreements with Asian exporters has steadied the local market. The supply chain is no longer in crisis — but it remains fragile. As long as the strait stays closed and the war continues, the question facing the government is whether to extend a costly but meaningful relief measure, or leave Australian drivers exposed to the full force of a global energy market still very much at the mercy of distant conflict.
Australians got a brief reprieve at the pump in late April, but the relief was always going to be temporary. Two weeks of falling fuel prices—sparked by hopes of a US-Iran ceasefire—have evaporated as peace talks collapsed and the Middle East conflict deepened. Now, with global oil benchmarks climbing back toward crisis levels, service stations are bracing for another sharp spike in coming days.
On Friday, Australia's regional oil benchmark, Tapis crude, was trading at $174 a barrel. That's the highest price since the 2022 energy crisis triggered by Russia's invasion of Ukraine, and it's nearly triple what the federal government assumed when it drafted its mid-year budget. The Strait of Hormuz—one of the world's most critical shipping channels—remains effectively closed, choking off Middle Eastern energy exports and forcing global markets to rely on dwindling stockpiles. Chevron's chief financial officer put it plainly: there's almost no buffer left. Exxon's chief executive warned analysts that if the strait stays closed, "there's more to come."
The immediate impact will hit Australian drivers within seven to ten days. On Friday, regular unleaded was averaging $1.80 a litre in Sydney and Melbourne, with diesel at $2.50. Those prices are expected to jump sharply as the international spike filters through to local service stations. In late March, before the brief ceasefire rumour offered hope, diesel had climbed to $3.10 a litre and unleaded to $2.59. The government's 26-cent cut to the fuel excise—introduced in April to help bring inflation down—has become a political flashpoint. Prime Minister Anthony Albanese has not ruled out extending it beyond the June 30 deadline, though he's offered no commitment. "We don't know when this war will end," he said on Friday. "We don't know if the Strait of Hormuz will be open, what the timeframe is."
There is one piece of good news buried in the data. Panic buying has subsided. In early March, when fuel supplies seemed genuinely threatened, Australians rushed to fill their tanks, driving fuel sales to a six-year peak. But demand has since plummeted by as much as 20 percent, suggesting motorists have changed their driving habits in response to higher prices. The number of service stations running out of fuel has fallen to less than half what it was in the first weeks of the conflict. Government messaging about fuel conservation, combined with increased supply agreements with Asian exporters, has steadied the local market. The supply chain, at least, is no longer in crisis.
But that stability is fragile. As long as the Middle East remains at war and the Strait of Hormuz stays closed, oil prices will remain volatile and elevated. The government faces mounting pressure to extend its fuel excise cut, a move that would cost the budget but offer relief to households already squeezed by inflation. Treasurer Jim Chalmers has pointed out how crucial the cut has been since April, when a 33 percent jump in petrol prices had pushed inflation to 4.6 percent in March. The question now is whether the government will bite the bullet and extend the measure—or whether Australian drivers will face the full force of global energy markets when the cut expires in three months.
Citações Notáveis
There's very little of the buffer left. The market hasn't seen the full impact of that yet.— Chevron CFO Eimear Bonner and Exxon CEO Darren Woods
We don't know when this war will end. We don't know if the Strait of Hormuz will be open, what the timeframe is.— Prime Minister Anthony Albanese
A Conversa do Hearth Outra perspectiva sobre a história
So the ceasefire was real, but the peace talks fell apart. What changed?
The ceasefire itself was real—it gave markets genuine hope for a few weeks. But the underlying conflict didn't resolve. The Strait of Hormuz is still closed, and neither side has moved toward a lasting settlement. Markets are forward-looking; they saw the talks fail and realized this could drag on for months.
Why does the Strait of Hormuz matter so much?
It's the world's most critical oil chokepoint. About a third of global seaborne oil passes through it. When it closes, you can't replace that supply quickly. Refineries can't just switch sources overnight. So prices spike, and they stay spiked until the strait reopens.
The government cut the fuel excise by 26 cents. That's a real intervention.
It is. And it worked—it helped bring inflation down. But it's temporary, ending June 30. If oil prices stay high, the government faces a choice: extend the cut and spend more money, or let prices rise and hurt households and inflation again.
What about the panic buying that happened in March?
That was real too. People thought fuel might become scarce or unaffordable. They filled up, hoarded. But once supply stabilized and prices eased slightly, that behaviour stopped. Demand fell 20 percent. People adapted—they drove less, took public transport, changed their habits.
So the supply crisis is over?
The acute crisis is over. But it's not stable. It's stable because of government intervention and because people changed their behaviour. If prices spike again, you might see panic return. The underlying problem—a closed strait, a war with no end in sight—hasn't gone away.
What's the government likely to do about the excise cut?
Albanese hasn't ruled out extending it. But he's also not committed to it. He's waiting to see how the conflict develops. If prices stay high, the political pressure to extend will be enormous. If they fall, he can let it expire and claim victory.